Welcome to Compliance Calendar LLP: Your Trusted Partner for Transfer and Transmission of Shares. We understand that the transfer and transmission of shares is a critical aspect of corporate governance. Whether you are a company looking to facilitate the transfer of shares between shareholders or a shareholder undergoing a transmission process due to inheritance or other circumstances, our experienced team is here to assist you. As a leading legal and compliance firm, we specialize in handling secretarial assignments, including seamless and compliant transfer and transmission of shares.
Why Choose Compliance Calendar LLP?
- Expertise and Experience: With years of experience in the legal and compliance industry, our dedicated team has extensive knowledge and expertise in managing the transfer and transmission of shares as we stay updated with the latest regulations and ensure that all procedures are carried out in accordance with applicable laws under the Companies Act, 2013 and related rules framed thereunder.
- Comprehensive Solutions: Our Compliance Manager offer end-to-end solutions for the transfer and transmission of shares, providing a hassle-free experience for our clients. From document preparation and verification to liaising with regulatory authorities, we handle all aspects of the process, allowing you to focus on your core business activities.
- Customized Approach: We understand that every company and shareholder have unique requirements. Our compliance team takes the time to understand your specific needs and tailors our services accordingly. Whether you require assistance with share transfers within your company or transmission of shares due to unforeseen circumstances, we provide personalized solutions that meet your individual needs.
- Strict Compliance: Compliance is at the heart of everything we do at Compliance Calendar LLP. Our Compliance Manager ensure that all transfer and transmission procedures comply with the Companies Act, applicable rules, and regulations. Our meticulous approach ensures accuracy and minimizes the risk of legal complications or delays.
CCL Transfer and Transmission Services:
- Share Transfer within Companies: We assist companies in facilitating the transfer of shares between existing shareholders. Our compliance team ensures that all necessary documents, such as share transfer deeds and share certificates, are prepared accurately and filed with the relevant authorities. We handle the entire process, from share transfer documentation to updating the company's records.
- Transmission of Shares: In cases of transmission due to inheritance, death, or other circumstances, we guide shareholders through the legal requirements and procedures. We help prepare the necessary documents, including transmission applications, affidavits, and indemnity bonds, and assist in obtaining the required approvals and clearances from regulatory authorities.
- Documentation and Compliance: Our compliance team takes care of the documentation and compliance requirements related to share transfers and transmissions. We ensure that all necessary forms, resolutions, and filings are completed accurately and submitted within the prescribed timelines.
- Liaison with Regulatory Authorities: We act as a liaison between your company and regulatory authorities, such as the Registrar of Companies and stock exchanges. Our team handles all communication, coordination, and follow-up, ensuring a smooth and efficient process.
GET STARTED TODAY:
Don't let the complexities of share transfer and transmission hinder your company's growth or create unnecessary challenges for shareholders. Contact Compliance Calendar LLP today to benefit from our expertise and comprehensive solutions. Our dedicated team is ready to assist you in navigating the transfer and transmission process, ensuring compliance and peace of mind. Let us handle your secretarial assignments, while you focus on building a successful business.
Legal Genesis on Transfer/ Transmission of Shares
Transfer of ownership is possible by transfer of shareholding or Share by any person or group of persons in favour of another person or group of persons. In India as well as outside India, companies run by share capital funds either corporates or small business enterprises. Shares are defined under the Companies Act 2013 Section 2 (84) "share" means a share in the share capital of a company and includes stock. Shares are like any other goods. A purchaser gets no better title than the seller. Share Transfer is a statutory Right in India and regulated by its Article of Association.
What is Share Transfer?
Transfer of shares is a transaction resulting in a change of share ownership. A shareholder, whether in public or private company, has a property in his share which he has a right to dispose of, subject only to any express restriction which may be found in the articles of the company.
Are Shareholders and Members same or different?
Normally, it is considered that every shareholder is a member, and every member is a shareholder. However, it may be possible that a person may be a holder of share by transfer but would not become member until the transfer is registered in the books of company in his favour and his name is entered in the register of members (MGT-1) under the Companies Act 2013. In the same way, a member who has transferred his shares, though he does not hold any shares continues to be member of the company until the transfer is registered and his name is removed from the register of members maintained by the company under section 88 of the Companies Act, 2013.
A person holding equity shares of a company and whose name is entered in the records of a depository as a beneficial owner of the share is deemed to be a member of the company and when he desires to transfer the share to another person he can do so.
Shares in a Private Limited And Public Company
- A private limited company is a limited company incorporated under the Companies Act, 2013 (or any one of its predecessor acts), with an article that restricts the transfer of its shares. With restrictions on transfer of shares, and limited number of members, a private limited company enjoys greater flexibility, less legal formalities, and the small shareholders body facilitates prompt decisions.
- A public limited company must have at least seven members and its name end with “Limited” (abbreviated as – ‘Ltd.’). Subject to the provisions of the Companies Act, 2013, the shares issued by them are freely transferable and it can raise public deposits.
Basic Conditions Before Transfer Depend Upon-
Two important elements or factor or conditions must be required before a person can acquire membership of a company-
- agreement in writing to become a member; and
- entry of the name of the person, in the register of members of the company
Documents Required for the Trasnfer of Shares
When initiating the process of share transfer or share transmission, certain documents are typically required. While the specific documentation may vary depending on case-to-case basis and individual circumstances, here are some common documents often requested:
Share Transfer:
- Share Transfer Deed: A share transfer deed is a legal document that facilitates the transfer of shares from the transferor (existing shareholder) to the transferee (new shareholder). The deed includes details such as the names of the transferor and transferee, the number and class of shares being transferred, and the consideration (if any) for the transfer.
- Share Certificate: The original share certificate or a copy of it should be provided by the transferor, as it serves as evidence of ownership. This document will need to be endorsed or canceled upon the completion of the share transfer.
- Letter of Request: A letter of request from the transferor to the company, formally stating their intention to transfer shares, is typically required. The letter should include details such as the names of the transferor and transferee, the number and class of shares to be transferred, and any specific instructions related to the transfer process.
- Board Resolution: In the case of share transfer by a company, a board resolution is necessary. This resolution authorizes the transfer of shares and should be prepared and signed by the board of directors.
- Identity and Address Proof: Both the transferor and transferee are usually required to provide copies of their identity and address proofs. These can include passport copies, driver's licenses, Aadhaar cards, or other government-issued identification documents.
- Stamp Duty Payment: Stamp duty may be applicable on the share transfer, depending on the jurisdiction. Payment of the appropriate stamp duty should be made, and the stamped share transfer deed should be submitted along with the other documents.
Share Transmission:
- Transmission Application: A transmission application is filed by the legal heirs or representatives of a deceased shareholder to request the transmission of shares. The application should include details such as the name of the deceased shareholder, their date of death, the relationship of the applicant to the deceased shareholder, and the requested transmission details.
- Death Certificate: A certified copy of the death certificate of the deceased shareholder is required as proof of their demise. This document should be obtained from the relevant government authority.
- Succession Certificate or Probate: Depending on the jurisdiction and the value of the shares being transmitted, a succession certificate or probate may be required. These legal documents establish the rights of the legal heirs or representatives and authorize them to claim the shares of the deceased shareholder.
- Affidavit and Indemnity Bond: In some cases, an affidavit and indemnity bond may be required. These documents confirm the legal heirs' consent to the transmission and indemnify the company against any potential claims related to the transmission.
- Identity and Address Proof: The legal heirs or representatives seeking the transmission of shares should provide copies of their identity and address proofs, similar to the requirements for share transfers.
- Board Resolution or Shareholder Resolution: Depending on the company's internal procedures, a board resolution or shareholder resolution may be necessary to approve the transmission of shares.
Bonus Points: It is important to note that the specific documents and requirements may vary based on the jurisdiction and the unique circumstances surrounding the share transfer or transmission. It is advisable to consult with compliance professionals/ company secretaries at Compliance Calendar LLP to ensure compliance with the specific regulations applicable to your situation.
Procedure for the Transmission of Shares
The following is the step-by-step process to transfer of Shares:
Step 1 – Give a notice in writing to convey intention to transfer the share to the Company
Transferor(s) and/or Transferee(s) need to intimate to the company for desire of transfer shares and after receipt of such notice, the company has to notify the other members regarding the availability of such shares and the price as determined by the directors or the auditors of the company.
Step 2 – Drafting & Execution of Transfer Deed and Shareholders Agreement
Transferor(s) and/or Transferee(s) need to execute the instrument of transfer as per Rule 11 of the Companies Act 2013 in "Form SH-4". Shareholders agreement shall also be executed along with all terms & conditions specified regarding transfer from one to another. The signatures of the transferor and the transferee in the share transfer deed must be witnessed by a person giving his signature, name, and address.
Step 3 – Payment of Stamp Duty on SH-4
The Stamp duty is payable “by the person drawing, making or executing such instrument” SH-4. As regards stamp duty, it is not disputed that there was no previous talk between the parties on this point, though ordinarily and as a matter of law in case of transfer of shares, it is the vendor by whom the stamp duty is payable.
Transfer Deed should be duly stamped as per Indian Stamp Act, 1899 with stamp duty (currently 0.015%) paid on market value or consideration amount, whichever is higher. But, in some state’s duty is payable in form of franking of transfer deed. For this transfer deed along with a letter addressed to the Additional Collector (Stamps) is to be submitted to General Stamp Office. A court fees of Rupees five is also to be paid and do not forget to cancel the stamps affixed at the time or before signing of the transfer deed. The transferor is responsible to affix and cancel the stamps.
Step 4 – Issue or Endorsement of Share Certificate (SH-1)
Share Certificate in the format of SH-1 (as specified at very first time in the Companies Act 2013) must be issued to the transferee within one month from the receipt of Share Transfer Instrument called SH-4 by the Company.
If the original share certificate has been lost, the shareholder needs to lodge FIR for the loss of share certificate. Such letter should contain all details available with the shareholder pertaining to his shareholding and the respective share certificate. A copy of such letter and FIR should be duly deposited with the concerned company.
Step-5: Submit the documents to company
Transfer Deed along with original share certificate must be lodged with the company, or if no such share certificate exists then a letter of allotment must be lodged with the company along with the instrument of transfer.
Step 6 – Hold Board meeting and pass the Resolution
On receipt of documents under step 5 the company shall duly hold a board meeting as per Section 173 for approving the share transfer and pass appropriate resolution to the said effect. The Company shall also be guided by its Articles as to the requirement of holding a Board Meeting.
In case of a company, where a Share Transfer Committee/Committee of Directors (refer the Terms of Reference), has been duly constituted, the said transfer shall first be approved by the said committee of the Board and thereafter sent for final approval to the maim Board.
Step-6: Make necessary entry in the Register of transfer in the record of the Company
Entries in the register constitute prima facie evidence of the particulars entered therein. As such, the register should be updated once change in the ownership of shares occurs by transfer or if any change in any other particulars to be entered in the register is intimated to the company.
Entries in the register should be authenticated by the secretary of the company or by any other person authorized by the Board for the purpose, by appending his signature to each entry.
Step 7 - Refusal or Acceptance of Transfer by Board
As per Section 58 of the Companies Act 2013 and Articles of Association the Board has the power to reject the transfer of shares.
The private company may refuse to register the transfer in this case and send notice to the Transferor/ Transferee/ person giving intimation within 30 days from the date when instrument of transfer was delivered to the company, stating reasons for refusal or Acceptance If the company accepts and registers the transfer then it shall issue Share Certificate within one month from the date of receipt of instrument of transfer in the name of Transferee and shall make necessary changes in the Register of Members.
Step 7 – Reporting to ROC in form MGT-7 through Annual Compliance
There is no such notice or intimation required to be given to Registrar of Companies. However, the Share Transfer details shall be given to Registrar of Companies (ROC) in Annual Return Compliance of the company in Form MGT-7/7A for transferring the partly paid up shares of a company which are not held in electronic form. Company can attach Transfer details along with the list of Shareholders in the form itself.
Features
Section 56 of Companies Act, 2013 and Sub-Rule (1) Of Rule 11 of Companies (Share Capital and Debentures) Rules, 2014 deals with the share Transfer in the Company. A Company having share capital, other than the transfer between persons both of whose names are entered as holders of beneficial interest in the records of a depository. An instrument of transfer of securities held in physical form shall be file in Form No. SH-4. In case of Listed Company more provision needs to comply under-
- SEBI Circular CIR/MIRSD/10/2013 dated October 28, 2013
- NDSL/CDSL Bye Laws with respect to the transfer and transmission of shares
A company shall not register a transfer of partly paid shares, unless the company has given a notice in Form No. SH.5 to the transferee and the transferee has given no objection to the transfer within two weeks from the date of receipt of notice.
Post Compliance After Transfer of Shares-
- Every instrument with the date of its execution specified thereon shall be delivered to the company within sixty days from the date of such execution;
- Where the instrument has been lost or the instrument of transfer has not been delivered within the prescribed period, the company may register the transfer on such terms as to indemnity as the Board may think fit;
- Issue of Share Certificate or Endorsement of Shares; and
- Entry in the Register of Transfer
Maintenance of Register of Share Transfer By The Company
Every company should, from the date of its registration, maintain a register of share transfers and enter therein particulars of every share transferred. The register is not open for inspection by anyone. The register should be preserved permanently and should be kept in the custody of the secretary of the company, or any other person authorized by the Board for the purpose.
Register of Share Transfer Should Contain Below Particulars:
- Transfer serial number.
- Date of lodgment of transfer deed;
- Total number of shares to be transferred.
- Consideration;
- Transferor’s name and folio number;
- Certificate number(s);
- Distinctive numbers;
- Transferee’s name and folio number, address, occupation, father’s/husband’s name;
- Value of stamp duty paid;
- Date of board / committee resolution approving transfer;
- New certificate number, if any;
- Date of dispatch of the certificate(s).
Due Diligence on Register of Transfer Whether:
- The company has maintained separate register of transfers for different classes of shares/debentures, and entered therein the particulars relating to the registration of transfer of shares/ debentures;
- Transfer number as per the register of transfer and date of approval has been entered in the Share Transfer Deed(SH-4);
- The Company has maintained a separate file of documents like Powers of Attorney, Probate, Letters of Administration and/or Succession Certificate, Resolution of companies or other bodies corporate authorising any particular person(s) to sign on its behalf that are registered with the company; and
Details of nomination forms have been noted if any.
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